October 3rd, 2008
Euro/Dollar
exchange rates reversal
good for European carriers
Dublin based stock brokers Bloxham reports that Ryanair has a large reserve of U.S. dollars purchased with euro revenues at a rate of $1.50 and higher. According to Bloxham these are in place to pay for acquisitions over the next three years. Bloxham quotes aircraft, insurance and oil for as examples. According to Bloxham some technical analysts think the oil price is a straight play on the dollar. The seven year bear run in the dollar (from 0.90 against the euro) certainly looks highly correlated with the price of oil (see chart in Oil Tab). Bloxham takes the view that the bear run is now in reverse, as the euro discovers its underlying zone has to pay for a troubled banking system. If that pattern continues, oil prices are set to fall further.
Benefits for EU carriers
Bloxham takes the view that as the price of oil in dollars falls it is looking increasingly attractive for the euro denominated carrier. The prospect of a large year-on-year cut in unit fuel costs in the summer of 2009 beckons once again.
EasyJet Vs Ryanair pricing
Bloxham points out that a key benchmark is easyJet. It is Ryanair’s most formidable competitor across Europe and has locked in almost 50% of its oil needs to September 2009 at a price of $122. Beating that by over 20% gives Ryanair competitive advantage in a cost line that accounts for over 40% of expenses, and augments lower ex-fuel costs. Equipped with that, Ryanair can guarantee very low market fares next summer while making substantial profits.
Consumer spending
According to Bloxham looking consumer spending prospects, low fares will be essential to stimulating demand for the forseeable future.
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Headline News was last updated: December 23, 2009
Service
Guide.
M
Fare Trends
Source: CBS
Updated 05-Sept-2008
Reservation1st Checked Bag 2nd Checked Bag Seat Selection / by Phone Fee Fee Priority / (per person) (each-way) (each-way) Leg Room American $20$15 $25None
$15 $25NoneContinental $15 $15 $25(10)None
$15 $25(10)NoneDelta $25Free $50None
$25Free $50NoneNorthwest$20$15 (9) $25 $5 - $35
$20$15 (9) $25 $5 - $35United $25$157 $25 $14 - $109
$25$157 $25 $14 - $109US Airways $25 - $35$15 $25 $ 5 - $30
$15 $25 $ 5 - $30AirTran $15Free $10 - $20 (5) $6 - $20
$15Free $10 - $20 (5) $6 - $20Alaska $15 Free $25None
$15 Free $25NoneFrontier $25Free
$25Free $25
None
JetBlue $15Free
$15Free$20 $10 - $30
Southwest FreeFree
Free Free (3+ $25)
$10 - $30 1
Spirit $20$15 - $25
$20$15 - $25 $25
$5 - $15
Midwest$25 Free
$25 Free $20
$65
Hawaiian $10-$25 $15
$15 $25
None
Go Free$10
Free$10 $17
None
ExpressJet Free Free
Free Free
None
Virgin America $10 Free
Free $25
$50 - $100
Allegiant $10 - $15 ea/way$15 - $25 5
$10 - $15 ea/way$15 - $25 5 $15 - $25 5
$11 - $13
Sun Country $10Free
Free $25
Beverage/Snack Packet
Meal
Alcohol
Oversize Bag Fee (each-way)
Overweight Bag Fee (each-way)
American Free/none$3 - $10
$3 - $10 $6
$150
$50 - $100
Continental FreeFree 2
Free 2 $5
$100
$50
Delta Free $4 - $10
Free $4 - $10 $5 - $6
$150
$80 - $150
Northwest Free/$3 - $5
$7 - $10
$5 $100
$50
United Free
Free $5 - $7 3
$6
$125
$125
US Airways $2/$58
$78
$7
$100
$50 - $100
AirTran Free
None
$6
$29 - $69
$29 - $69
Alaska Free
$5
$5
$50 - $75
$50
Frontier Free
$3
$5
$75
$75
JetBlue Free
None
$5
$75
$50 - $100
Southwest Free ($3 Energy)
None
$4
$50
$25 - $50
Spirit $2 - $3/$2 - $5
None $5
$100 - $150
$50 - $100
Midwest Free (Cookie)
$6 - $11
$5
$80
$50 - $65
Hawaiian Free
Free $6 $160 - $360
$50
Go $1.5/None
$1.5/None None
$2.5 - $3.5
$25
$25-50
ExpressJet Free
Free
$1 - $3
$50
$50
Virgin America Free
$6 - $8
$5 - $6
$50
$50 - $100
Allegiant$2/$2-$4
$2/$2-$4 $4
$5
may apply
may apply
Sun Country Free
Free
$5
$60
$60
Travel w/ Pets (each-way)
Unaccompanied Minors (per flight)
Curbside Check-In
Non-Refundable Ticket Change Fee 6
American $100 - $150
$100
Free
$150
Continental $125
$75 - $100
Free
$150
Delta $150 - $275
$100
$3
$100
Northwest $80 - $359
$75 - $100
$2
$150
United $125 - $250
$99
$2
$150
US Airways $100
$100
$2
$150
AirTran $69
$39 - $59
Free
$75
Alaska $100
$75
$2
$50 - $75
Frontier $100 - $200
$50
n/a
$150
JetBlue $100
$75
$2
$100
Southwest No Pets
Free
Free
Free
Spirit $85
$75
$2
$80 - $90
Midwest $100
$50 - $100
Free
$100
Hawaiian $35 - $175
$35 - $95
n/a
$150
Go $25
$25
n/a
$20
ExpressJet $50
$50
n/a
$50
Virgin America $100
$75
n/a
$75
Allegiant $100
$100
n/a
$50 4
Sun Country $75
$50
Free
$75 - $100
Miscellaneous Fees
JetBlue now charges $7 for a blanket and pillow (yours to keep).
1 Business Select Additional Fee for Priority Boarding
2 Flights 2+ hours
3 Snack Box
4 Trip Flex Free
5 Pre-paid Cheaper than Time of Check-in
6 Plus Difference in Current Airfare Price
7 For Travel on or after August 18, 2008
8 New charges as of August 1, 2008
9 For tickets purchased on/after July 10, 2008 for travel on/after August 28, 2008
10 Goes into effect immediately for tickets purchased for travel on or after Oct. 7, 2008
Low December 2009: Low fares era maay be set to end as EasyJet and Ryanair change strategy to maximize returns for shareholders.
EasyJet and Ryanair plan to cut back rapid growth rates and capital spending and to pay out free cash flow to investors.
Ryanair will implement its new strategy when its current fleet acquisition program for 112 B737-800s ends in 2013.
EasyJet announced a similar strategy change early in 2009 after a boardroom bust-up between the airline’s founder, and management.
December 2009
ATA (Air Transport Association) reports that passenger revenue fell 7% in November versus the same month in 2008.
Traffic: November was the 13th consecutive month of annual revenue declines, due mainly to 12 consecutive months of ticket price declines.
Yields (Domestic): ATA says November domestic yield/RPM excluding taxes declined 4.6% year-over-year to 14.47 cents.
Yields (International): Transatlantic yield declined 8.2% to 12.07 cents, transpacific yield fell 14.9% to 10.88 cents, & Latin America yield dropped 11.5% to 13.36 cents.
Yields (Cargo): October cargo traffic (RTMs) fell for the 15th consecutive month, down 1% year-over-year, reflecting a 3% domestic decline and flat international traffic.
September 2009
Traffic: IATA expects a 20% drop in the number of first class and business class passengers for 2009.
Recovery: IATA sees no recovery until 2012 at the earliest noting that it took more than three years to recover after the Sept. 11 attacks, and the recession has been worse.
Structural change: IATA is saying this recession may result in a long-lasting structural change for the airline industry.
Fuel prices: IATA notes that though the price of fuel fell in 2009 from its record 2008 highs costs are increasing again, dampening the industry’s recovery.
Cash consequences: Airlines have to conserve cash, which means they are delaying spending on more fuel-efficient aircraft.
Losses: European carriers are expected to post $3.8B, the largest losses, followed by Asia-Pacific airlines with $3.6B & North American carriers with $2.6B.
Losses: The global airline industry will lose $11B in 2009, IATA says.
Revenues: IATA says airline revenues will fall by 15%, from $535B in 2008 to $455B in 2009.
Traffic: Passenger traffic is expected to decline by 4% and cargo by 14% in 2009.
August 2009
Fees lead to revenue loss. The $1.2 Bn airlines charge in extra passenger fees is offset by the average 70M loss in passengers that translates into a reduction of $1.2 Bn in fees & $14 Bn in passenger revenues annually.
Ancillary fees: Airlines have been reducing costs, cutting capacity and looking to ancillary fees to survive the economic downturn. Now about $17.50 per passenger.
Lost baggage: More than 31M bags (1.4% of all checked luggage) arrived late of which 1.8M bags never arrived.
Lost baggage: Airlines pay $3 Bn annually compensating passengers and shipping late bags.
